JPMorgan Chase's shock trading loss of at least $2 billion from a failed hedging strategy knocked financial stocks across the globe on Friday, as well as the reputation of the biggest U.S. bank by assets and its CEO Jamie Dimon.

JPMorgan Chase & Co's
shock trading loss of at least $2 billion from a failed
hedging strategy knocked financial stocks across the globe on
Friday, as well as the reputation of the biggest U.S. bank by
assets and its CEO Jamie Dimon.

For a bank lauded for navigating the fallout from the 2008
financial crisis without reporting a loss, the errors are
embarrassing, especially given Dimon's criticism of the
so-called Volcker rule to ban proprietary trading by big banks.

Dimon conceded the losses, which could rise by a further $1
billion, were linked to a Wall Street Journal report last month
about a London-based trader Bruno Iksil, nicknamed the 'London
Whale', who, the paper said, amassed an outsized position which
hedge funds bet against.

Iksil, who graduated in engineering from the Ecole Centrale
in Paris in 1991, was not available for comment. The Frenchman,
and the Chief Investment Office (CIO) where he works, are known
by rival credit traders for taking extremely large positions.

A friend and former JPMorgan colleague said Iksil and his
team were not involved in so-called prop trading, where a bank
makes bets with its own money, and its activities were known
about at the highest levels.

"The CIO does not do prop trading, let's be clear on
that...It involves taking positions in the form of investments,
trades, credit-default swaps, or other, with the aim of
rebalancing the risks of JPMorgan's balance sheet.

"The information comes from the very top of the bank and I
do not even think that the CIO team members at Bruno's level are
given the full picture," the ex-colleague said.

The CIO is run by New York-based Ina Drew, who is Chief
Investment Officer.

Iksil was brought into the CIO unit to head its credit desk,
an asset class it had not previously covered, a person who
worked in the unit said. It built up large credit positions over
several years through trades which were vetted by management and
the losses now likely resulted from a combination of these
trades going wrong, the person said.

The CIO desk had grown rapidly in the past five years and
was given free range to trade in a whole range of financial
products, the only exception being commodities, they added.